1
EXHIBIT 4.16
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and entered
into as of the 29th day of April, 1998, by and between Metal Management, Inc.,
a Delaware corporation (the "COMPANY"), 138 Scrap, Inc., an Illinois
corporation, and Xxxxxxx, Inc., an Illinois corporation (collectively, the
"SELLERS").
RECITALS:
A. Pursuant to an Asset Purchase Agreement dated as of April 29, 1998
(the "PURCHASE AGREEMENT"), by and among the Sellers, the stockholders of the
Sellers (the "SHAREHOLDERS"), Xxxxx Iron & Metal, Inc., an Illinois
corporation ("XXXXX"), and 138 Scrap Acquisition Corp., an Illinois
corporation ("ACQUISITION"), Sellers received from the Company shares of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"). All
terms which are capitalized and used without definition herein shall have the
meanings ascribed to such terms in the Purchase Agreement.
B. As a condition to the Sellers agreeing to enter into the Purchase
Agreement, the Sellers are being granted registration rights with respect to
their shares of Common Stock.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. Registration.
(a) The Company hereby covenants and agrees to include for registration
the Registrable Securities issued to the Sellers pursuant to the Purchase
Agreement in the next selling stockholders registration statement filed by the
Company subsequent to the date of this Agreement with the Commission. The
Company will use its best efforts through its officers, directors, auditors,
and counsel to cause such registration statement to become effective as
promptly as practicable following the filing thereof.
(b) As used herein: (i) "COMMISSION" means the Securities and Exchange
Commission; (ii) "ELIGIBLE HOLDER" means each of the Sellers (or the
Shareholders) to the extent it (or the Shareholders) then holds any
Registrable Securities; and (iii) "REGISTRABLE SECURITIES" shall mean the
shares of Common Stock owned by the Sellers on the date hereof as set forth on
Schedule 1, which, with respect to each Seller, have not been previously sold
pursuant to a registration statement or Rule 144 promulgated under the
Securities Act of 1933, as amended (the "SECURITIES Act").
(c) Upon a registration pursuant to the provisions of this Section 1,
the Company shall use its best efforts to cause the Registrable Securities so
registered to be registered or qualified for sale under the securities or blue
sky laws of such jurisdictions as the Eligible Holder may reasonably request;
provided, however, that the Company shall not be required to qualify to do
2
for sale under the securities or blue sky laws of such jurisdictions as the
Eligible Holder may reasonably request; provided, however, that the Company
shall not be required to qualify to do business in any state by reason of this
Section l(c) in which it is not otherwise required to qualify to do business.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 1 and shall from time to time
amend or supplement each applicable registration statement, preliminary
prospectus, final prospectus, application, document and communication for such
period of time as shall be required to permit the Eligible Holder to complete
the offer and sale of the Registrable Securities covered thereby. The Company
shall in no event be required to keep any such registration or qualification in
effect for a period in excess of nine (9) months from the date on which the
Eligible Holder is first free to sell such Registrable Securities; provided,
however, that, if the Company is required to keep any such registration or
qualification in effect with respect to securities other than the Registrable
Securities beyond such period, the Company shall keep such registration or
qualification in effect as it relates to the Registrable Securities for so long
as such registration or qualification remains or is required to remain in
effect in respect of such other securities.
(e) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall furnish to each Eligible Holder such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of
copies of each prospectus contained in such registration statement and each
supplement or amendment thereto (including each preliminary prospectus), all
of which shall conform to the requirements of the Securities Act and the rules
and regulations thereunder, and such other documents, as any Eligible Holder
may reasonably request to facilitate the disposition of the Registrable
Securities included in such registration.
(f) Upon a registration pursuant to the provisions of this Section
1, the Company shall furnish each Eligible Holder with an opinion of its
counsel (reasonably acceptable to the Eligible Holder) to the effect that (i)
the registration statement has become effective under the Securities Act and no
order suspending the effectiveness of the registration statement, preventing or
suspending the use of the registration statement, any preliminary prospectus,
any final prospectus, or any amendment or supplement thereto has been issued,
nor has the Commission or any securities or blue sky authority of any
jurisdiction instituted or threatened to institute any proceedings with respect
to such an order, (ii) the registration statement and each prospectus forming a
part thereof (including each preliminary prospectus), and any amendment or
supplement thereto, comply as to form with the Securities Act and the rules and
regulations thereunder, and (iii) such counsel has no knowledge of any material
misstatement or omission in such registration statement or any prospectus, as
amended or supplemented. Such opinion shall also state the jurisdictions in
which the Registrable Securities have been registered or qualified for sale
pursuant to the provisions of Section l(c).
(g) The Company agrees that until all the Registrable Securities have
been sold under a registration statement or pursuant to Rule 144 under the
Securities Act, it shall use its best
2
3
efforts to keep current in filing all reports, statements and other materials
required to be filed with the Commission to permit holders of the Registrable
Securities to sell such securities under Rule 144.
(h) The Company shall notify the Eligible Holder promptly when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed. The Company
shall notify the Eligible Holder promptly of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and use its best efforts to promptly update and/or correct such prospectus;
provided, however, that the Company shall not be required to update and/or
correct such prospectus if, and so long as, the Board of Directors of the
Company determines in good faith that to do so at such time would be
detrimental to the business or prospects of the Company. Any such period
(beginning upon notification of the Eligible Holder) in which the prospectus
remains not updated or corrected is herein referred to as a "STANDSTILL
PERIOD."
(i) The Company shall notify the Eligible Holder of the issuance by
the Commission of any stop or other order suspending the effectiveness of the
registration statement. If at any time the Company shall receive any such
order, the Company shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time; provided, however, that
the Company shall not be required to obtain the withdrawal or lifting of such
order if, and so long as, the Board of Directors of the Company determines in
good faith that to do so at such time would be detrimental to the business or
prospects of the Company.
(j) In connection with the registration of Registrable Securities
pursuant to a registration statement, each Eligible Holder shall: (i) furnish
to the Company such information regarding itself and the intended method of
disposition of Registrable Securities as the Company shall reasonably request
in order to effect the registration thereof, and (ii) upon receipt of any
notice from the Company of the initiation of a Standstill Period, immediately
discontinue disposition of Registrable Securities pursuant to the registration
statement until receiving written notice from the Company that the Standstill
Period has terminated.
2. Indemnification. (a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each Eligible Holder, its
officers, directors, partners, employees, agents, and counsel, and each
person, if any, who controls any such person within the meaning of Section 15
of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), from and against any and all loss, liability,
charge, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Section 2, but not be limited to, reasonable attorneys' fees
and any and all reasonable expenses whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus, or final
prospectus
3
4
(as from time to time amended and supplemented), or any amendment or
supplement thereto, relating to the sale of any of the Registrable Securities
or (B) in any application or other document or communication (in this Section
2 collectively called an "APPLICATION") executed by or on behalf of the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to register or qualify any of the
Registrable Securities under the securities or blue sky laws thereof or filed
with the Commission or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or necessary
to make the statements made therein not misleading, unless (x) such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to such Eligible Holder by
or on behalf of such person expressly for inclusion in any registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be, or (y) such
loss, liability, charge, claim, damage or expense arises out of such Eligible
Holder's failure to comply with the terms and provisions of this Agreement, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement. The foregoing agreement to indemnify
shall be in addition to any liability the Company may otherwise have,
including liabilities arising under this Agreement.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "INDEMNIFIED PARTY") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of
the institution of such action (but the failure so to notify shall not relieve
the Company from any liability other than pursuant to this Section 2(a)) and
the Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties), provided that the indemnified party shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties unless
the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action or the Company shall not
have promptly employed counsel reasonably satisfactory to such indemnified
party or parties, or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to
those available to the Company, in any of which events such fees and expenses
shall be borne by the Company and the Company shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Section 2 to the contrary notwithstanding, the
Company shall not be liable for any settlement of any such claim or action
effected without its written consent, which shall not be unreasonably
withheld. The Company shall not, without the prior written consent of each
indemnified party that is not released as described in this sentence, settle
or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action,
in respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto), unless such settlement, compromise,
consent, or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees
promptly to notify Eligible Holder of the commencement of any litigation or
proceedings against the Company or any of it officers or directors in
connection with the sale of any Registrable Securities or any
4
5
preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Registrable
Securities.
(b) Each Eligible Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Registrable Securities held by
such Eligible Holder, each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, and its or their respective counsel, to the same extent as the
foregoing indemnity from the Company to such Eligible Holder in Section 2(a),
but only with respect to statements or omissions, if any, made in any
registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented), or any amendment or supplement
thereto, or in any application, in reliance upon and in conformity with
written information furnished to the Company with respect to such Eligible
Holder by or on behalf of such Eligible Holder, expressly for inclusion in any
such registration statement, preliminary prospectus, or final prospectus, or
any amendment or supplement thereto, or in any application, as the case may
be. If any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus,
or final prospectus or any amendment or supplement thereto, or in any
application, and in respect of which indemnity may be sought against such
Eligible Holder pursuant to this Section 2(b), such Eligible Holder shall have
the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the
indemnified parties, by the provisions of Section 2(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section
2(a) or 2(b) (subject to the limitations thereof) but it is found in a final
judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Agreement
expressly provides for indemnification in such cases, or (ii) any indemnified
or indemnifying party seeks contribution under the Securities Act, the Exchange
Act or otherwise, then the Company (including for this purpose any contribution
made by or on behalf of any director of the Company, any officer of the
Company who signed any such registration statement, any controlling person of
the Company, and its or their respective counsel), as one entity, and the
Eligible Holder of the Registrable Securities, included in such registration in
the aggregate (including for this purpose any contribution by or on behalf of
an indemnified party), as a second entity, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them may
be subject, on the basis of relevant equitable considerations such as the
relative fault of the Company and such Eligible Holder in connection with the
facts which resulted in such losses, liabilities, claims, damages, and
expenses. The relative fault, in the case of an untrue statement, alleged
untrue statement, omission, or alleged omission shall be determined by, among
other things, whether such statement, alleged statement, omission, or alleged
omission relates to information supplied by the Company or by such Eligible
Holder, and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement, omission,
or alleged omission. The Company and Eligible Holder agree that it would be
unjust and inequitable if the respective obligations of the Company and the
Eligible Holder for contribution were determined by pro rata or per capita
allocation of the aggregate losses, liabilities, claims, damages, and expenses
(even if each Eligible
5
6
Holder and the other indemnified parties were treated as one entity for such
purpose) or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 2(c). In no case shall
any Eligible Holder be responsible for a portion of the contribution
obligation imposed on all Eligible Holder in excess of its pro rata share
based on the number of shares of Common Stock owned by him and included in
such registration as compared to the number of shares of Common Stock owned
by all Eligible Holder and included in such registration. No person guilty of
a fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section
2(c), each person, if any, who controls any Eligible Holder within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and
each officer, director, partner, employee, agent, and counsel of Eligible
Holder or control person shall have the same rights to contribution as such
Eligible Holder or control person and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed
any such registration statement, each director of the Company, and its or
their respective counsel shall have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 2(c). Anything
in this Section 2(c) to the contrary notwithstanding, no party shall be liable
for contribution with respect to the settlement of any claim or action
effected without its written consent. This Section 2(c) is intended to
supersede any right to contribution under the Securities Act, the Exchange Act
or otherwise.
3. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, the Sellers, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, unless such amendment, modification or supplement is in
writing and signed by the parties hereto.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in accordance with the provision of the
Purchase Agreement.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of the Registrable Securities subject to the
terms hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
6
7
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application hereof in any circumstance
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions contained herein shall not be affected or
impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and
exclusive statement of this agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises warranties or undertakings, other than those set forth or referred to
herein, concerning the registration rights granted by the Company pursuant to
this Agreement.
IN WITNESS HEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
METAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Title: Chief Executive Officer
138 SCRAP, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
XXXXXXX, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------------
7
8
SCHEDULE 1
----------
REGISTRABLE SECURITIES
----------------------
Stockholder Number of Shares of Common Stock
---------- --------------------------------
Xxxxxxx, Inc. -----------------------